"Combining Clear Channel and JCDecaux would create one of the few global media companies in the world with a lot of potential growth," Mr. Decaux told The Wall Street Journal earlier this month. "Of course we're interested."
Frustration for buyers
Though a merger presents a win-win for two major outdoor players looking to increase their international profiles, it could also be a point of frustration for buyers in the already consolidated outdoor industry.
"What scares me a little bit is [that] Clear Channel is the biggest outdoor operator in the top 25 markets, and they also have all the airports and malls," said John Connelly, MediaCom's VP-out of home media. "Any more consolidation would not be good from an advertising or agency standpoint."
CBS Outdoor posted $1.27 billion in revenue in 2005, followed by Clear Channel Outdoor, which had $1.22 billion in revenue. Lamar was third with $1.02 billion. JCDecaux, which does the bulk of its business in markets outside the U.S., has a much smaller footprint here, with just $138.2 million in 2005, so combining with Clear Channel would give it an instant boost in the U.S.
Fear of a monopoly and ensuing litigation also would affect the hypothetical merger, which Mr. Connelly speculates wouldn't happen until at least 2008. "Obviously, we would hope the government would take a good hard look at it, which I'm sure they will. In the past, the government hasn't been too concerned with outdoor dominating the marketplace. Some agencies and advertisers feel the same way: If they don't want to go outdoor, they'll buy print or radio -- anything else," he said.
Main competitors Lamar and CBS would hardly be down for the count, especially in key markets, should a merger take place even tomorrow.
"In all cases competition is a good thing," said Carol Rothschild, director at Kinetic Worldwide. "In venues such as airports and malls, there is only one vendor per mall/airport, so it's not going to make a huge difference in terms of pricing. If one vendor has more properties, it may help in packaging for more advantageous pricing overall."
While Clear Channel was quick to divest a third of its radio holdings as part of its Lee/Bain buyout, Mr. Connelly said the company won't rush for an outdoor cash-out. "They have the luxury of really sitting down with their outdoor operation," he said.